From: Terry Reilly
Sent: Thursday, February 27, 2020 8:07:58 AM (UTC-06:00) Central Time (US & Canada)
Subject: FI Morning Grain Comments 02/27/20

PDF attached

 

Morning. 
Today is position day.  COVID-19: 82,000+ infected and 2,800+ deaths.  Confirmed cases in South Korea rose to more than 1,750.

 

 

 

Weather

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:
 

Concern
about Argentina drying and rising crop stress potentials over the next couple of weeks will begin influencing market trade in the next few days. There will also be some concern over flooding rain expected in Minas Gerais, Goias, Rio de Janeiro and northeastern
Sao Paulo, Brazil in the next seven days. Some important drying will occur in Brazil before the greater rain falls and that will support second season planting for a while.

            Southeast
Asia weather is quite varied. World Weather, Inc. anticipates an erratic shower and thunderstorm pattern in March supporting early season moisture boosting.

           
Winter grain and oilseed crops will remain favorably rated and poised for improvement in the spring in China and southeastern Europe. India’s winter crops are expected to perform well this year because of greater than usual rainfall.

           
U.S. early season planting may be slow this year in the Delta, southeastern states and possibly the lower Midwest because of frequent rain and wet field conditions.

            South
Africa will get some timely rainfall along with parts of Australia to maintain a favorable outlook. With that said, eastern Australia production has not improved much, but some sorghum has received supplemental rainfall recently.

            Overall,
weather today will likely produce a neutral to slightly bullish bias.

 

MARKET
WEATHER MENTALITY FOR WHEAT:
 

Worry
over rising temperatures in the central and southern U.S. Plains over the next couple of weeks might have the markets attention. Wheat will be brought out of dormancy in Texas and Oklahoma along with areas to the east. Cold weather may return later in March
and/or April to bring back freezes which could place some of the crop at risk. Crops in Kansas, Colorado and Nebraska will lose winter hardiness as well.

            Russia
crops are going to come into spring favorably moist except in the far south where greater rain will be needed. Kazakhstan will also need greater rain in the spring while Ukraine already has enough moisture to induce some improvement just as soon as seasonal
warming arrives.

            North
Africa’s outlook has not changed for Morocco, but there is a little more rain slated for Tunisia and northeastern Algeria over the next two weeks. No general soaking of rain is expected, but any showers would be welcome.

           
Australia’s winter small grains will not be planted prior to late April which leaves plenty of time for improved weather and soil conditions.

            India’s
wetter outlook over the next two weeks will further ensure a significantly large-sized winter crop.

            France
and Spain need to warm up along with Italy to support spring planting and to stimulate early season crop development when weather conditions improve.

           
Overall, weather today will likely maintain a mixed influence on market mentality.

Source:
World Weather Inc. and FI

 

 

 

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

 

Bloomberg
Ag Calendar

THURSDAY,
FEB. 27:

  • USDA
    weekly crop net-export sales for corn, soybeans, wheat, 8:30am
  • Port
    of Rouen data on French grain exports
  • International
    Grains Council monthly market report

FRIDAY,
FEB. 28:

  • ICE
    Futures Europe weekly commitments of traders report on coffee, cocoa, sugar positions ~1:30pm (~6:30pm London)
  • CFTC
    commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
  • FranceAgriMer
    weekly update on crop conditions
  • U.S.
    agricultural prices paid, received, 3pm
  • AmSpec,
    Intertek, SGS palm oil export data for Feb. 1-28
  • EARNINGS:
    Olam, Golden Agri, Sime Darby

Source:
Bloomberg and FI

 

FND
Delivery Estimates

·        
Corn zero

·        
Soybeans 0-75, bias zero

·        
Meal 250-600

·        
SBO 900-1500

·        
Chicago wheat zero

 

CBOT
registrations

·        
No changes

 

 

 

USDA
Export Sales

·        
USDA export sales for soybeans were again poor of only 339,300 tons. Soybean meal sales were at the low end of expectations, but shipments were good at 276,700 tons.  Soybean oil sales, after a good run over the last month, fell to a low
5,600 tons. SBO shipments were 20,500 tons.

·        
Corn sales were 864,600 tons, down from 1.25 million last week and were at the low end of expectations. 

·        
All-wheat sales slightly improved from the previous week to 381,900 tons but fell below a range of expectations.

·        
Pork sales were 38,900 tons, with China booking 7,200 tons. 

 

 

 

 

Macros

·        
US GDP Annualized (Q/Q) Q4 S: 2.1% (exp 2.1%; prev 2.1%)

·        
US Personal Consumption Q4 S: 1.7% (exp 1.7%; prev 1.8%)

·        
US Durables Goods Orders Jan P: -0.2% (exp -1.5%; R prev 2.9%)

·        
US Initial Jobless Claims Feb-22: 219K (exp 212K; R prev 211K)

–        
Continuing Claims Feb-15: 1724K (exp 1719K; R prev 1733K)

·        
EU Commission: Considering Possible Support Measures For Sectors Hit By Coronavirus, Including Tourism, Cars

·        
Coronavirus Patient In California Was Not Tested For Days – NYT

·        
Goldman Sachs: US Companies Will Generate No Earnings Growth In 2020 If Coronavirus Becomes Widespread

 

 

Corn.

·        
Corn futures

are
lower bias bear spreading despite a sharply weaker USD on coronavirus concerns.  USDA export sales for corn were 864,600 tons, low end of expectations. 

·        
Crude oil was down about $1.40/barrel as of 7:15 CT.  

·        
We estimate SK bought nearly 1.5 million tons of corn this week, including at least two cargos from the US.  

·        
CBOT corn open interest fell 55,969 contracts on Wednesday. 

·        
China has been a big buyer of Ukraine corn in recent weeks and the Ukraine shipping lineup suggests nearly 500,000 tons could end up being shipped during February to China. 

·        
Weekly US ethanol production increased 14,000 barrels to 1.054 million barrels and stocks decreased 63,000 barrels to 24.718 million.  A Bloomberg poll looked production to be up 1,000 stocks to decrease 5,000
barrels.  

·        
The USDA Broiler Report showed eggs set in the US up 3 percent and chicks placed up 3 percent.  Cumulative placements from the week ending January 4, 2020 through February 22, 2020 for the United States were
1.52 billion. Cumulative placements were up 4 percent from the same period a year earlier.

·        
China was looking to sell 20,000 tons of pork from reserves today. 

·        
Yesterday there was a headline stating US President Trump will pare biofuel waivers for oil refineries. Assuming this is for 2019 biofuel waiver applications, one estimate stated the cut could go from 1.43 billion gallons, waived in 2018,
to about 400 million for 2019, but if all big refineries are cut out. 

·        
We don’t look for any CBOT corn deliveries on Friday.  Today is position day. 

 

 

Export
Developments

·        
None reported

 

Soybean
complex
.

·        
CBOT open interest was down 20,227 in soybeans, down 19,489 in meal and down 20,474 in soybean oil. 

·        
Brazil’s currency made a new record low on Thursday.  At the time this was written it was at 4.4573. The Argentina peso was again weaker.   

·        
Southern Brazil will see much needed rain during the balance of this week. 

·        
It was reported by AgRural Brazil’s soybean harvest late last week was 31 percent complete versus 31 average.  It could be near 50 percent by the weekend. 

·        
FND soybean deliveries are estimated between zero to 75 contracts with a bias of zero, soybean meal 250-600, and soybean oil 900-1500. 

·        
Offshore values are leading CBOT soybean oil 70 points higher and meal $1.50 lower.

·        
Rotterdam vegetable oils this morning were up 4-5 euros for nearby soybean oil positions and up around 17 euros for rapeseed oil. Rotterdam meal when imported from SA were 2-4 euros higher. 

·        
CNGOIC reported China’s soybean crush increased from the previous week despite virus woes. An estimated 1.6-1.8 million tons will be crushed this week.

·        
If it comes to it, China is readying 100,000 ducks to combat a locust invasion. 

·        
China:

·        
China cash crush margins as of this morning, using our calculation, were 133 cents per bushel (130 previous day), compared to 159 cents a week ago and negative 12 cents around this time last year. 

·        
Malaysian palm markets:
 

 

Oilseeds
Export Developments

 

 

 

Wheat

·        
US wheat was lower as corona virus concerns increase and poor USDA export sales of 381,900 tons.